07Nov10:37 amEST

Who Blinks First?

Of all the major indices we regularly review for Members, the lone part of the market where bears could still make a colorable claim of something amiss of late has remained the small (and micro) cap stocks.

We have repeatedly looked the remarkably compressed IWM daily chart, updated below, which is the actively-traded ETF for those Russell 2000 Index small cap stocks. As we noted before, those Bollinger Bands remaining as compressed as they have been sure does smack of some type of imminent directional break.

And when bulls have every reason to expect yet another upside resolution, bears did not quite blink, at least with respect to the IWM, and forfeit that breakout higher. 

This morning, amid some earnings pitfalls like PCLN TRIP, bears are giving the small caps another shot at a $148 breakdown. With a broad market fading off opening highs, I am keeping a close eye on these small caps to see if the weakness actually does spread to the rest of the tape or, instead, we see more familiar type of action as the other indices ignore the small cap divergence. 

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